Economic Feasibility Analysis of On-Grid PV System
without Battery Storage for a Commercial Building in
Karachi, Pakistan
Talha Javed Soleja, Muhammad Farooq
Siddiqui Muhammad Kashan
Department of Electrical Engineering Jubilee Corporation
NED University of Engineering and Fakhri Trade Centre, Shahrah-e-Liaquat,
Technology, Karachi, Pakistan
University Road, Karachi, Pakistan kashan_92@hotmail.com
mfqsidd@neduet.edu.pk
talhajaved@neduet.edu.pk
Abstract—the prospect of global warming has seen the world’s
transition towards zero carbon energy sources. Amongst the
renewable energy technologies, solar photovoltaic (PV) and wind
are the most mature. This paper discusses the modeling of on-grid
solar PV system without battery storage along with its
performance analysis. In the latter part of the paper, economic
feasibility and the reduction in carbon emissions from the project
are also calculated. The calculations and analysis discussed in the
paper are performed for head office building of Jubilee Life
Insurance Company Limited, located in Karachi, Pakistan. The
city has longitude of 25°N and latitude of 67°E.
Keywords — PV system, PV modeling, renewable energy,
feasibility analysis
I. INTRODUCTION
The electricity short fall in Pakistan was recorded to be 5298
MW during the fiscal year 2015-16[1]. As per the “State of
Industry Report” published by the National Electric and Power
Regulatory Authority (NEPRA), the electric shortfall is likely
to persist for the upcoming 2 years[1, 2]. Given the strong
existing potential of solar PV generation in majority areas of
Pakistan[3], the electricity shortfall can be catered by the use of
distributed generation at the consumer end. This will not only
reduce the maximum system demand, but also the cost of
generation will be less if the roof top of buildings, which is
usually unoccupied, is used for PV generation.
After tremendous researches, it has been found out that the
demand shortfall can be suppressed by extending generation
through renewables. This will only lead to decrease in national
grid shortfall, but also cause decrement in carbon footprints[4].
Pakistan’s geographical resources favor the utilization of
conventional generation techniques as it is rich in natural
resources but due to socio-economic difficulties and greenhouse
effect, generation capabilities are restricted. The power sector of
Pakistan mainly comprises of WAPDA (Water and Power
Development Authority), K-electric (Karachi Electric),
HUBCO (Hub Power Company) and Nuclear Power Plants.
Approximately 35% of national electricity is generated by using
furnace oil as a primary source[5]. To extend the power
generation facility, Independent Power Producers have been
magnetized into this ever-expanding power sector.
978-1-5386-5517-7/18/$31.00 ©2018 IEEE
Areeb Waseem
Jubilee Life Insurance Company Limited
74 / 1 –A, Lalazar, M.T. Khan Road,
Karachi, Pakistan
areeb.waseem@jubileelife.com
In Pakistan, the dependency on oil and gas for the generation
of electricity is significantly insufficient, but their insufficiency
is not primarily the reason for crippling the power shortage.
There is a giant problem of circular debt which has been
accumulated in the power sector of Pakistan[6]. In
contradiction to the conventional power system, in which
power generation is centralized and limited access for new
producers, the distributed energy generation through
renewables experiences the power flow in multitude sources
and loads. The cost issues related to the power generation using
renewable sources has always been the negative point for solar
energy in general and unambiguously for photovoltaic.
Although the increased manufacturing of PV panels has a
significant impact on the cost of PV generated electricity.
However, it is still far higher than the per unit cost of electricity
generated via conventional methods[7].
Various research work has been carried out worldwide for the
determination of techno-economic feasibility of an on-grid PV
system as discussed in section I. A techno-economic feasibility
analysis has been carried out for a 500 KW on-grid PV system
in Bangladesh, the economic affect was evaluated in local
currency and the total payback for the said scheme was
calculated to be 13.1 years and carbon emission reduction was
calculated to be 658 tons[8]. The research was executed on RET
Screen and solar irradiation data was selected from NASA.
Similar economic feasibility analysis research was profound for
a commercial area in Bangladesh and was found feasible as the
internal rate of return was greater than the capital cost utilized
in setting up the PV micro utility system[9]. A techno economic
feasibility analysis was carried out for a deserted region whose
demand was met by the hybrid power generation system
consisting of PV and fuel cells that actually catered primary air-
conditioning loads along with the surplus power supply to
electrolyzer for hydrogen cell. It was found viable with the per
unit cost of 145$/MWh with the minimal carbon emission rate
during generation[10].
In order to design efficient solar photovoltaic panels, proper
sizing of PV panels and batteries are essential to satisfy the cost
and energy factors. Various strategies have been used for the
proper sizing of PV panels along with the auxiliaries. A
standalone PV system was examined for Sfax, Tunisia using
multi-criteria consideration and was found to be 55% annual
profitable by the proposed sizing technique[11].Another
strategy for determination of best cost efficient design analysis
was performed for rural areas in Rajasthan, India for maximum
annual cost savings of the system by using Improved Harmony
Search Algorithm (IHSA) and was found robust and
feasible[12]. The technical terminologies involved are the I-V
characteristic curves of the PV module that must be examined,
along with the necessary short circuit current ratings(Isc),
maximum power voltage(Vmp), photovoltaic current(Ipv), diode
saturation current (Is) and open circuit voltage(Voc). This data
is usually provided by the manufacturer[13]. However, if the
mentioned characteristics are not available, they can be
obtained by using analytical or optimization techniques.
In this research work, analysis has been carried out for on-grid
PV system for a commercial building in Karachi, Pakistan. The
grid connected solar PV system is one which is connected to the
grid so that the power can be exported or imported via a net-
metering system. The PV generation system can be installed in
two ways, either with the battery storage system, or without a
battery storage system. The battery storage system gives the
advantage of high reliability and power storage, but is costly
mainly due to the battery recurring battery replacement costs.
Another option to install solar power is to use a PV system
without battery storage, this system will work only during the
sun hours. A grid connection is essential to ensure the supply of
electric power above the maximum plant capacity and during
night hours. In case of non-availability of net-metering, a cut-off
system is required to stop production of power on days where
the load is less than the system rating to avoid damage being
caused to the system. Therefore, this system is efficient for
commercial buildings and offices where the running load during
the daytime is almost constant.
In this paper, the economic feasibility analysis has been
evaluated in terms of annual cost savings, payback period for the
utilized capital cost on the installation of on-grid PV system, the
internal rate of return along with the net present value. The
analysis includes real time data for inverter efficiency at given
temperatures. The cost of equipment includes merely based on
market prices in PKR (Pakistani Rupees). Another feasibility
factor that has been encountered in this research work is the
carbon emission in grams/Kwh that has been calculated in
section IV.
II. MODELLING OF PV SYSTEM
The major factors that must be considered while modeling a
PV system are the load type, total load and space available for
the installation of solar panels. The building on which the project
is implemented has an area of around 270m2 and a connected
load of 342 kW. So, in this case, the available area is the major
constraint. It is determined that, keeping in view the
intermediate spacing between tilted panels and the shading
analysis, a PV system of 20.9 kW size can be installed at the roof
top of the selected building.
The inverter size must be greater than the total panel size[14],
so an inverter of 25 kW rating is selected. The system without
battery is used, which means that the leftover demand of the
system will be fulfilled by the utility grid. Also, the net-metering
setup is not used so the system needs to be cut off in case of
lesser demand. Polycrystalline PV module CS6U-325 from the
manufacturer “Canadian Solar” with a tilt of 25 degrees and
inverter from the manufacturer Sunny Tripower (SMA) is
selected for installation. The system layout is shown in figure I.
The output of a PV panel varies as a function of daily
insolation (hours of peak sun), panel efficiency at STC
(Standard Temperature Condition), losses due to dirt, cable and
inverter[14] is given by:
Pdc = Prated × [1-CT(Tcell-TSTC)]
where Pdc is DC power from the panel
Prated is the rated power from the panel
CT is Temperature coefficient in ⁰C
Tcell is the cell temperature and is given by:
S(NOCT − 20)
T =T +
800
where Ta is the average temperature of the geographical
location
NOCT is the nominal operating cell temperature
S is solar radiation intensity required = 1000 W/m2
The selected module has a NOCT of 43°C and the
temperature coefficient is 0.41% / °C [15]. The AC output power
is given by:
Pac = Pdc × ninv × nmismatch
where ηinv is the efficiency of inverter
ηmismatch are the losses due to current mismatch
The inverter efficiency is 98% and the mismatch losses are
considered to be 5%[16].
Now considering the historical data of the site available[17],
the monthly units generated are shown in table I as under.
Figure I: The layout of On-grid solar without Battery Storage
Table I: Output of the Installed PV System
8 DC Combiner 1 Job 10,000
Average
Kwh/ Temper Tcell DC AC System 9 Perforated Cable Tray 100 Meter 90,000
m2day ature Power Power output
10 Miscellaneous Job 45,000
Month (°C) (°C) (kW) (kW) (kWh)
Transportation and
Jan 5.59 19.5 48.3 18.82 17.52 3,035.84 11 Material handling Job 35,000
Feb 5.54 22.3 51.1 18.58 17.30 2,683.04 12 Commissioning Job 20,000
Mar 5.88 26.4 55.2 18.23 16.97 3,093.48 13 Installation Job 65,000
Apr 6.15 29.0 57.8 18.01 16.76 3,093.07 Total Turnkey Cost of the System 1,947,280
May 5.76 30.8 59.6 17.85 16.62 2,967.97

Jun 5.44 31.1 59.9 17.83 16.60 2,708.77 The cost savings resulting from the system will be:
Cost Savings = Annual System Yield × 16 PKR/kWh
Jul 4.37 30.3 59.1 17.90 16.66 2,257.12
= 33796.5×16
Aug 4.58 29.1 57.9 18.00 16.76 2,379.11 = 540,744 PKR
Sep 5.97 28.9 57.7 18.02 16.77 3,003.96 These savings should also incur the GST (General Sales Tax) of
Oct 6.14 29.1 57.9 18.00 16.76 3,086.58 16%. So:

Nov 5.43 24.9 53.7 18.36 17.09 2,783.98 Cost savings = 540,744×1.16
Dec 5.01 20.9 49.7 18.70 17.41 2,703.59 = 627,263 PKR

Total annual yield of the System 33,796.5

B. Payback Period:
The payback period is an effective tool to determine the
feasibility of a project. The operation and maintenance cost are
III. ECONOMIC FEASIBILITY OF THE PROJECT taken to be 50,000 PKR/year, taking a discount rate of 10%
A. Cost and Savings of the Project: (KIBOR-Karachi Inter Bank Offer Rate + 3%), the payback
The total cost of the project, inclusive of all taxes and period is given by:
installation charges, as quoted by the vender is PKR 2,147,280. (1 + i) − 1
Total Cost = Yearly Saving ×
The cost breakdown is shown as under in table II. i(1 + i)
The facility electricity pricing is charged as a two part tariff
A-2B, fixed charges, which are a function of the system where n= payback period
maximum demand (PKR 400/kW) that occurs during the billing i= interest rate
cycle and the variable charges, which are a function of the n n
1,947,280= 577,263×[(1+10%) – 1]/ [10% × (1+10%) ]
kWh(kilo watt hour) of energy consumed (PKR 16/kWh)[18]. Solving the equation for ‘n’;
The installation of the project will greatly affect the no. of units n= 4.32 years
consumed from the utility as these units are now being generated
locally. C. Internal Rate of Return (IRR):
The project IRR for a life of 25 years, for which the output
Table II: Total Cost of the Project
of the solar panel is guaranteed. It is assumed that the annual
Amount derating in the performance of the system is balanced by the
S.No Component Qty. Units (PKR)
effect of inflation on the electricity prices that are to be
1 Solar PV Panel 64 Nos. 1,040,000 purchased from utility if the solar system is not present.
2 Solar Inverter, 1 Nos. 220,000 Inverter replacement cost (every 7 years) = 220,000PKR
Solar PV mounting Total Cost = Present Value of (Savings – Operation and
3 structure 1 Job 328,480 Maintenance Costs) – Present Value of Replacement Costs

4 DC Cables 280 Meter 47,600 The savings are based on annual return so the formula of
5 AC Cables 40 Meter 27,200 present value of annuity must be applied and for inverter costs.
Simple compound interest formulae can be used as shown in (1)
6 Earthling 40 Meter 7,000 and (2) respectively.
7 AC Combiner 1 Nos. 12,000
P(1 + (1 + i) )
Present value of Annuity = (1)
i
 Present Value = Future Value (1 + i) (2)
where P is the periodic saving (in years)
i is the interest rate (per year)
n is the time duration (in years)
1,947,280= 577,263×{[1-(1+i)-25]/(i)}-
220,000[(1+i)-7+(1+i) -14+(1+i) -21]
Solving the equation for ‘i’, the IRR is found to be 28.9%.
D. Net Present Value (NPV):
The net present value is a tool that determines the net savings
from whole life of the project in current worth. The NPV of the
project, over a life of 25 years and an interest rate of 10%, can
be calculated from (1) and (2).
NPV = 577,263×{[1-(1+i)-25]/(i)}-220,000[(1+i)-7
+(1+i) -14+(1+i) -21]-1,947,280
NPV = 3,092,003 PKR
IV. ENVIRONMENTAL IMPACT OF THE PROJECT
The carbon emission factor for Pakistan is 630gm-
CO2/kWh, so by the installation of this project with a
production of 28,998 kWh/years, 18.3 tons CO2 will be saved
from being released into atmosphere.
V. CONCLUSION
The project feasibility can be seen from various angles, it has a
payback period of 4.32 years which is lesser than its life, its
NPV is positive and it has an attractive IRR. All these factors
indicate the feasibility of the project. Importantly, its
environmental impact is appealing as in save 18.3 tons of
CO2/year to be released into the atmosphere.
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